Qantas Airways (QAN.AX) reached new heights on Thursday as its shares climbed to a record high of A$9.54 during intraday trading before closing at A$9.42, marking a 0.5% gain for the day.
The rally followed the Australian flag carrier’s announcement of significant changes to its frequent flyer program, designed to win back cost-conscious travellers and address recent reputational challenges.
The revamp, set to roll out over the next 12 months, is being seen as a strategic move to increase customer loyalty and revenue.
The changes come after a tumultuous period for Qantas, marked by public outcry over the sale of tickets for canceled flights, among other controversies.
Qantas’ frequent flyer changes to boost loyalty among members
Qantas’ frequent flyer program, which generated A$2.5 billion in revenue in fiscal 2024—about 11% of the company’s total revenue—has been a cornerstone of the airline’s operations.
With 16.4 million members as of June 2024, the program plays a vital role in boosting customer retention and profitability.
The upcoming changes include increased availability of premium cabin reward seats, expanded partnerships with other airlines, and the introduction of lower economy reward seat fares within Australia.
Members will also benefit from earning more frequent flyer points on Qantas flights.
These improvements build on last year’s revamp, which added 20 million additional reward seats for purchase using points.
By further enhancing the program, Qantas hopes to solidify its position as the airline of choice for frequent travelers.
Changes to program coincides with peak holiday travel season
The timing of the announcement coincides with peak holiday travel season in Australia. Jessica Amir, a market strategist at trading platform moomoo, noted the seasonal demand for domestic and international travel as a tailwind for Qantas.
“Around this time of the year, we see peak travel and consumer discretion, with many Australians still on holiday until after Australia Day,” Amir said.
“Not only are Australians travelling domestically, but many Chinese nationals are also returning home. This increased demand for travel is expected to continue benefiting Qantas.”
According to the Australian Bureau of Statistics (ABS), total departures from Australia rose 11.6% year-over-year in November, while arrivals increased nearly 7% to 1.66 million.
Although the ABS does not disclose specific airline data, these figures reflect strong travel demand, which Qantas is well-positioned to capture.
What do analysts say about QAN share price?
Analysts are optimistic about Qantas’ future, with several major firms issuing bullish ratings for the stock.
Goldman Sachs has earlier called Qantas the “flagship carrier of Australia” and expects the airline’s passenger capacity to exceed pre-pandemic levels by fiscal 2025.
“By FY25, we forecast Qantas’ capacity will return to 102% of its pre-COVID level,” Goldman Sachs stated.
“We believe QAN is not priced for a generic recovery, let alone prospects for improved earnings capacity. We continue to see upside associated with substantially improved MT earnings capacity,” the brokerage said.
Morgan Stanley also rates Qantas a “buy,” setting a price target of A$10.50.
The brokerage pointed to factors like lower fuel costs boosting profitability and the possibility of further share buybacks in FY25 added to a strong travel demand.
Analysts say there remains some pent-up demand for travel, offering further growth opportunities for the airline industry.
Australia’s strong economic resilience and a historically low unemployment rate of 4.0% are expected to support both business and leisure travel.
This favorable economic backdrop provides a solid foundation for ongoing travel activity, both within Australia and internationally.
Qantas has already conducted several share buybacks in recent years, and analysts believe more could be on the horizon, further boosting investor confidence.
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